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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






2. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






3. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






4. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






5. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






6. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






7. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






8. Exists if a producer can produce more of a good than all other producers






9. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






10. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






11. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






12. The practice of selling essentially the same good to different groups of consumers at different prices






13. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






14. The additional cost incurred from the consumption of the next unit of a good or a service






15. Entry (or exit) of firms does not shift the cost curves of firms in the industry






16. A firm that has market power in the factor market (a wage-setter)






17. Product demand - productivity - prices of other resources - and complementary resources






18. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






19. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






20. Two goods are consumer substitutes if they provide essentially the same utility to consumers






21. Ed = 8 - infinite change in demand to price change






22. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






23. MUx / Px = MUy/Py or MUx/MUy = Px/Py






24. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






25. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






26. The lost net benefit to society caused by a movement away from the competitive market equilibrium






27. Entry of new firms shifts the cost curves for all firms upward






28. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






29. Costs that change with the level of output. If output is zero - so are TVCs.






30. The rational decision maker chooses an action if MB = MC






31. Es = (%dQs) / (%dPrice)






32. Occurs when LRAC is constant over a variety of plant sizes






33. Ed = 0 - no response to price change






34. A good for which higher income increases demand






35. Ed < 1






36. The imbalance between limited productive resources and unlimited human wants






37. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






38. The sum of consumer surplus and producer surplus






39. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






40. Models where firms agree to mutually improve their situation






41. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






42. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






43. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






44. Ed > 1 - meaning consumers are price sensitive






45. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






46. Models where firms are competitive rivals seeking to gain at the expense of their rivals






47. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






48. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






49. AVC = TVC/Q






50. Ed = 1